AT&T’s stock returns

As of July 18, AT&T (T) has risen 15.9% in 2019. The stock has risen 4.4% in the last 12 months. Notably, AT&T stock is trading 23.5% above its 52-week low of $26.80. However, the stock is just 3.7% below its 52-week high of $34.37. While AT&T stock has been impressive in 2019, the stock has fallen 23.2% in the last three years. In contrast, AT&T stock has fallen 6.9% in the past five years.

Forward PE ratio

AT&T’s forward PE ratio is 9.20x. The company’s adjusted EPS will likely rise 1.1% in 2019 and 2.0% in 2020. The company’s earnings will likely grow 2.0% compounded annually in the next five years. The stock is grossly overvalued based on the growth. If the revenue or earnings miss, the stock has significant downside potential.

AT&T’s estimated five-year PE-to-growth ratio is 4.55x. The stock is overvalued when the ratio is above one.

Analysts’ recommendations

According to the data compiled by Thomson Reuters, among the 28 analysts tracking AT&T, 14 recommended a “buy,” 12 recommended a “hold,” and two recommended a “sell.” Analysts’ 12-month average target price for the stock is $33.70, which indicates a potential upside of about 1.8% based on its closing price of $33.09 on July 18. The company’s lowest 12-month target price estimate is $21, while the highest 12-month target price estimate is $43.

Analysts’ expectations

AT&T will likely report its second-quarter earnings results on July 24. The company will report the results before the market bell. For the second quarter, analysts expect the company to report revenues of $44.9 billion, which implies a rise of 15.1% from $39.0 billion in the second quarter of 2018. For the same period, analysts expect AT&T’s adjusted EPS to be $0.89, which implies a fall of 2.2% from $0.91 in the second quarter of 2018. Read How Will AT&T’s Q2 Results Stack Up Against the Competition? to learn more.

Currently, AT&T is facing a carriage fee dispute with station owners Nexstar Media and CBS. Reportedly, CBS might pull its local CBS stations by July 19 if the telecom company doesn’t agree to the terms. Nexstar’s local channels including CBS, NBC, ABC, and Fox have been part of the blackout since July 4.

On July 17, Microsoft signed a multiyear deal to offer cloud-computing services to AT&T.

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